Does a Geothermal Heat Pump Add Value to My Home?

Geothermal is a significant investment for any homeowner, and you never know if you might move before you reach your payback period. What most people want to know is how much value will a geothermal system add to the value of their home.

Geothermal is an amenity that appraisers will refer to as contributory value. This value is determined by comparing home sales data from one house to the next with similar amenities. The part that makes this whole thing challenging is that, while geothermal is increasingly popular, it is hard to find comparable homes in a market from which to appraise value. The more geothermal systems that are in an area, the more likely it is that your home will be able to pull value from its own geothermal. Until there is a more saturated market it is hard to predict what the value added to your home will be.

But there are other factors that will be taken into consideration when trying to appraise the value of a home with a geothermal system installed. Energy savings, no matter where they come from, add value. And it is a fact that a geothermal system is energy saving. A geothermal heat pump can be up to 45% more efficient than a standard heat pump and save you 30 to 60 percent on your energy costs annually. Geothermal reduces your annual utility costs, thus adding value to your home.

In recent years programs have been developed that allow for appraisers to determine the valuation of sustainable buildings and homes. Appraisers now have a method for documenting energy efficient upgrades for homes, and this allows for more accurate analysis of your geothermal heat pump’s contributory value.

Geothermal also grants homeowners a 30% federal tax credit. Buyers may be attracted simply by the possible savings they will get in the long run by owning a house with geothermal heating and cooling.

So although there is no concrete answer about how much value a geothermal heat pump might add to your home, it definitely will save you money while you currently live there. There is only more and more data for appraising houses with geothermal systems and there is no question that with the shift in the world toward more and more sustainable resources, geothermal will become ever more popular and necessary.